What Does Group Health Insurance Cover?
Since the Affordable Care Act (ACA) was signed into law 10 years ago by President Barack Obama, ACA-compliant group health plans are required to include coverage for what the legislation describes as essential health benefits (EHBs).
The ACA’s 10 EHBs include:
- Ambulatory patient services (care without being admitted to a hospital)
- Emergency services
- Hospitalization (like surgery and overnight stays)
- Pregnancy, maternity, and newborn care (both before and after birth)
- Mental health and substance use disorder services, including behavioral health treatment
- Prescription drugs
- Rehabilitative and habilitative services and devices
- Laboratory services
- Preventive and wellness services and chronic disease management
- Pediatric services, including oral and vision care for dependents
For additional information, visit the HealthCare.gov website.
ACA-compliant plans are available in four metal tiers: Bronze, Silver, Gold, and Platinum. Each of the tiers represents a different level of cost sharing for the insured, as shown below:
|ACA Metal Tier||Health Plan/Insurance Pays||Insured Pays|
Deciding which ACA tier is right for you and your employees
There are important things to consider when selecting the tier of coverage for your group. A Bronze tier plan offers the lowest monthly premium, but also higher costs when you need to seek care. The deductible (the amount paid before the insurance plans starts to pay) on a Bronze plan can be thousands of dollars annually.
A Bronze plan can be a good choice if you’re looking for a way to protect yourself from a worst-case scenario, such as a major illness or injury. While your monthly cost may be low, you will have to pay for most routine care on your own (except for preventive care and wellness services, which are part of EHB coverage).
If you are considering a Silver tier plan, you can expect a more moderate monthly premium and moderate costs when seeking care. You’ll find a deductible on a Silver plan is typically lower than a Bronze plan deductible.
If you are willing to pay a slightly higher monthly premium, you’re likely to find more of your routine care covered under a Silver plan (as compared to a Bronze tier plan).
A Gold tier plan has higher monthly premiums than a Bronze or Silver plan, but it offers lower costs when you need care, because as shown above in the table, it typically pays 80% of medical costs. A Gold tier plan also usually offers a lower deductible before your plan begins to pay.
If you or your employees have a greater need for care, and you’re able to pay the higher premium for coverage, you may find a Gold plan is a good value.
A Platinum tier plan comes with the highest monthly premium, but the lowest costs when you get care. Deductibles are often very low, which means you plan starts paying its share of the costs earlier than plans in other tiers (like Bronze, Silver, or Gold).
If you frequently require medical services and are able to pay the higher Platinum tier premium, it may be worthwhile given that 90% of medical costs will be covered by your plan.
The HealthCare.gov website offers more information about calculating your “total costs of care” here.
What’s the Minimum?
You don’t have to be a large group to purchase group health insurance. Health plans write groups with as few as two covered persons (a business owner and an employee). It’s worth noting, though, that some carriers will not write a husband and wife group if both are owners of the business, or a business that is a sole proprietorship.
If your small business qualifies as an Applicable Large Employer (ALE), you are subject to the ACA employer mandate, which is sometimes referred to as the Employer Shared Responsibility Payment. The mandate affects employers with 50 or more full-time and full-time equivalent employees (working 30 or more hours weekly). It requires ALEs to offer health insurance that is “affordable” and provide minimum value to 95% of full-time employees and their children until they reach age 26. Failing to offer such coverage could subject your business to ACA penalties, which in 2020 range from $2,570 t $3,860 per employee depending on the violation (section 4980H (a) or 4980H (b)).
Affordability is determined by whether the employee share of the premium for the lowest-priced, self-only coverage does not exceed a specified percentage of the employee's household income; for 2020, it is 9.78%; in 2021, it will be 9.83%. If an employee’s share of the premium cost exceeds this threshold, you must increase the employee’s subsidy to make coverage more affordable.
If you’re not sure if your business is an ALE (subject to the mandate), you can use the Small Business Health Options Program (SHOP) calculator here, or the calculators on the CaliforniaChoice website. (Just click on “ACA Calculators” in the lower-right corner of the home page.)
Multiple Options Available
If you are shopping for Group Health Insurance, you will likely be able to choose from several different health plan options for your small business. Some carriers offer one, two, or a few plan types, while others may offer dozens. An exchange program, like the Covered California public exchange, or the CaliforniaChoice private exchange, offers a range of options, including HMO (Health Maintenance Organization), PPO (Preferred Provider Organization), or EPO (Exclusive Provider Organization) plans.
Each type of plan offers different out-of-pocket costs and co-pays (shared costs), which may or may not include coverage outside of your selected health plan’s provider network service area. For example, some HMOs and EPOs may serve only a limited geographic region.
Talk to a Broker to Learn More
Ask your employee benefits broker or health insurance agent for information about the plans available in your area. A broker can give you a custom quote for your business and employees. If you don’t already have a broker, you can search for one here.